Thryv Holdings, Inc. Q3 FY2024 earnings call

Turnaround Journey

• Management brought in 10 years ago to turn around Dex Media, transforming it into a global software company. Converting directory and marketing services customers to SaaS platform.

SaaS Performance

• SaaS business has $350 million ARR, 72% gross margins, 12% adjusted EBITDA margin, 29% growth. 12% of customers are multicenter. Product-led growth strategy and Keap acquisition contributing to growth.

Keap Acquisition

• Admired Keap's automations, which help Thryv move upmarket. Keap has a partner channel, product/engineering team, and 15,000 quality customers. Synergies expected around $10 million. Analyst Day in December to discuss integration.

SaaS

• Revenue: $87.1 million in Q3, up 29% Y/Y and 12% Q/Q.
• Adjusted gross margin: 72.2%, up 560 basis points Y/Y and 250 basis points Q/Q. SaaS-adjusted gross profits up 40% Y/Y.
• Adjusted EBITDA: $10.3 million, margin 11.8%.
• ARPU: $307. Subscribers: 96,000, up from 70,000 prior quarter.
• Net dollar retention rate: 101%, up 900 basis points Y/Y. 12% of customers are multicenter.

Marketing Services

• Revenue: $92.8 million in Q3.
• Marketing Services EBITDA: $9.3 million, margin 10%. Billings: $105.7 million, down 35% Y/Y.
• Consolidated adjusted gross margin: 65%, up 480 basis points Y/Y. Noncash impairment charge of $83.1 million related to marketing services business.

Fourth Quarter

• SaaS revenue: $90M-$92M; SaaS adjusted EBITDA: $9.5M-$10.5M; Marketing Services revenue: $81M-$83M.

Full Year

• Raised SaaS revenue guidance to $329.5M-$331.5M, SaaS adjusted EBITDA to $33.5M-$34.5M, Marketing Services revenue to $479M-$481M, Marketing Services adjusted EBITDA to $125M-$128M.
• Keap acquisition expected to add $11M-$12M revenue in Q4. Upsized follow-on equity offering raised $76M net proceeds to fund Keap acquisition and deleveraging.

• Marketing Services transition: Cannibalization of marketing services customers to SaaS may impact future revenue; timing of print publication affects Marketing Services EBITDA.
• Integration risks: Challenges in integrating Keap's platform and operations, though synergies are expected.

Q: Elaborate on Keap automations and cross-sell to Thryv SaaS customers A: Keap's automations help with marketing, service operations, sales, etc. Thryv's 96,000 subscribers have a group that can benefit from these automations, aiding upsell and preventing customers from graduating to larger tools.

Q: Integration of Keap platform with Thryv A: Will fully integrate products, using APIs initially for interoperability, with product and engineering teams working to unify the platform.

Q: Marketing services conversions and NRR A: Faster conversion of marketing services customers to SaaS due to attractive tools for growth. NRR at 101% is a result of increased multicenter customers and upselling, expected to remain around 100% going forward.

Q: Go-to-market for Keap and pricing A: Keap's strong partner ecosystem is a key driver. Distribution through Thryv's sales force and Keap's partners will evolve, with pricing and SKU considerations being worked out through collaboration.

Q: Marketing Services EBITDA and 2025 guidance A: Marketing Services EBITDA may decline in Q1 2025 due to print schedule, but full-year guidance for 2025 not yet provided.

Q: International expansion via Keap A: Keap has international presence and partners, providing an entry point for Thryv to expand into English-speaking and other markets.

Q: ARPU pressure and margin expansion A: ARPU pressure from accelerated conversion to SaaS with starter products and upsell opportunities. Gross margins expected to continue improving with multicenter adoption and Keap integration.